Eclipsed Vision

SoftBank’s Vision Fund Loses $32 Billion, Microsoft Co-Founder's Firm Raises $30 Million for AI Startups, and a Startup Sees Budding Opportunities to Boost Credit.

Author

Adam from VC Brags
May 11, 2023

Welcome Shareholders,

In this daily edition of the Brags Newsletter, we’ll cover SoftBank Vision Fund’s $32 Billion Misstep. Also, Paul Allen’s Institute looks to Fuel AI Startups with its New Fund, and Petal Springs to Life With its $35 Million Raise.

So sit back, grab a snack, and enjoy!

Venture Today 👏

  • SoftBank's Vision Fund posted a record loss this year, with the recent tech stock rally doing little to alleviate the struggles of its premier investment arm.

SoftBank reported a fiscal year loss of 4.3 trillion yen ($32 billion) for its Vision Fund segment, a significant increase from the 2.55 trillion yen loss the previous year, while its overall investment losses escalated to 5.28 trillion yen from 3.43 trillion yen year-over-year. Despite profitable exits from high-profile investments like Uber, SoftBank suffered losses in other sectors, notably from the declining valuation of Chinese AI firm SenseTime and Indonesian ride-hailing and e-commerce company GoTo.

SoftBank, which claims to currently be in defensive mode, executed just 25 deals with the Vision Fund last year while raising $35.46 billion via prepaid forward contracts using Alibaba shares in the fiscal year. Investors are now eying the impending US IPO of British semiconductor firm Arm, owned by SoftBank, as a potential means to bolster the Japanese company's balance sheet and possibly fund new investments.

Who’s Raising?

  • The Allen Institute for Artificial Intelligence, a firm launched by Microsoft’s Late Co-Founder Paul Allen, has unveiled a new $30 million fund dedicated to nurturing AI-centric startups.

Since its inception in 2014, the institute has closely followed AI trends, assembling a team of over 100 researchers, engineers, and business professionals to undertake AI-related projects. The new fund, which is triple the previous $10 million raised four years ago, was backed by the likes of Sequoia Capital, Madrona Venture Group, and Two Sigma Ventures.

Despite its modest $30 million fund, especially compared to AI startups raising billions in recent years, the Allen Institute plans to support five to seven pre-seed stage startups annually for the next four years. While VCs have invested billions in generative AI startups, the Allen Institute plans to focus on Domain Specific Foundation Models that are trained on hyper-specific datasets for specific tasks.

Startup of the Day

  • New York and Richmond-based fintech company, Petal, secured $35 Million in funding in a round led by Valar Ventures and featuring participation from investors including Story Ventures, Core Innovation Capital, and RiverPark Ventures, as well as strategic investments from Synchrony and Samsung Next.

Petal, a New York-based startup, offers three Visa credit card products aimed at underserved consumers, using cash flow underwriting and available credit scores to assess applicants' creditworthiness. The new investment will be divided between Petal and Prism Data, its spun-off subsidiary specializing in B2B data infrastructure and analytics.

Since its 2018 launch, Petal has predominantly approved credit cards for consumers with thin or no credit history, who have achieved an average credit score of 681 after a year as cardholders. Petal experienced substantial growth last year, adding 100,000 cardholders and increasing its annualized revenue to $80 million, and is projected to reach profitability in 2024.

Fresh Finds

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